Monday, December 24, 2012

Running Out Of Other People's Money

You wouldn't see a piece like this in the American mainstream media, especially in the Age of The One, and it's certainly odd to see it in the British press, but it is, as the British would say, spot on:

The promises that governments are making to their electorates are not just misleading: they are unforgivably dishonest. It will not be possible to go on as we are, or to return to the expectations that we once had. The immediate emergency created by the crash of 2008 was not some temporary blip in the infinitely expanding growth of the beneficent state. It was, in fact, almost irrelevant to the larger truth which it happened, by coincidence, to bring into view. Government on the scale established in most modern western countries is simply unaffordable...

Of course, the moral logic of this principle is absurd. The amount of wealth in an economy is not fixed so that one person having more means that somebody else must have less. But, for the purposes of our problem, it is the fault in the economic logic that is more important. The amount of money that is required to fund government entitlement programmes is now so enormous that it could not be procured by even very large increases in taxation on the “rich”. Assuming that you could get all of the rich members of your population to stand still and be fleeced (rather than leaving the country, as Gérard Depardieu and a vast army of his French brethren are doing), there are simply not enough of them to provide the revenue that a universal, comprehensive benefits system requires. And if all the French rich did stay put, and submit to President Hollande’s quixotic 75 per cent income tax, they would soon be too impoverished to invest in the supply side of the economy, which would undermine any possibility of growth...

There is no way that “taxing the rich” – that irresistibly glib Left-wing solution to everything – can make present and projected levels of government spending affordable...

At some point, we will have to accept that government-funded health care will consist of subsidised core services to be topped up by the patient’s own insurance or personal funds, just as dentistry and opticians’ services are now. Similarly, pension provision will have to be largely the responsibility of the individual. The greatest contribution that government will be able make to these efforts will be in cutting personal taxes, thus leaving people with more money to pay for provision that they will be free to choose for themselves.